Ethereum supply to drop to 66,000 ETH in 2023, leading to deflation
According to information from market research platform IntoTheBlock, published on March 18, Ethereum supply will drop by 66,000 ETH in 2023, a major step in the cryptocurrency world.
This is the result of Ethereum’s transition to a Proof of Stake (PoS) consensus in September 2022 with its “merge”. A new consensus mechanism consumes a portion of ETH transaction fees. This caused Ethereum to become deflated.
In 2023, the supply of Ethereum reduced by 66k $ETH due to burning a fraction of transaction fees. This move has made Ethereum deflationary, which is great news for crypto enthusiasts seeking scarce digital assets. #Ethereum #deflation pic.twitter.com/2RuwiioffW
— IntoTheBlock (@intotheblock) March 18, 2023
For those unfamiliar with the term, a deflationary currency means that the supply of the currency decreases over time. This is in contrast to inflationary currencies, which increase the money supply over time.
Deflation coins are particularly attractive to crypto-enthusiasts looking for scarce digital assets, as they believe that scarcity increases the asset's value.
It should be noted that another long-awaited Shanghai Capella upgrade, also known as the Shapella upgrade, is scheduled to go live on April 12, 2023.
The most notable aspect of this upgrade is the Ethereum Improvement Proposal (EIP) 4895. It introduces these impressions to the main network via validators. This is a key feature that was retained after the merge upgrade when Ethereum switched to Proof-of-Stake (PoS) consensus last September.
At the time of writing, the price of ETH is hovering around $1,816.52 per coin. The price of this asset has seen an increase of 26% over the past seven days.